The ex-council house is in the Ffestiniog village of Maentwrog
An MP who accused Gwynedd council of operating a discriminatory housing policy has been told the local authority is acting within the law.
Dominic Grieve, Conservative MP for Beaconsfield, criticised the authority for refusing to let a house sale go ahead because the buyers were not local enough.
The ex-council house in Maentwrog near Porthmadog which had been left to one of his constituents, came with a covenant which restricted the sale of the house to local people.
Dominic Grieve told MPs at the end of day adjournement debate in Westminster on Wednesday the council's actions were discriminatory and in breach of the Human Rights Act.
Two offers were received from buyers living in Wrexham and Tredegar who wanted to move to the area for work reasons, but the council blocked the sale as the potential purchasers had "insufficient local connections", he claimed.
Mr Grieve says that no one living in the area has expressed any interest in purchasing the property for £60,000 over the last 14 months.
In reply to his plea for the council to lift the covenant, Wales Office minister Don Touhig, said the council was acting fully within the law.
But he now hoped they would reconsider the matter.
It's completely outrageous, no local people are interested in buying the property and the house is now rotting and losing its value
Dominic Grieve MP for Beaconsfield
He sympathised with the owners and added that his colleague, Welsh Secretary Peter Hain, had written to the council to try to persuade them to lift the covenant.
In the meantime, he said the family could consider renting the property to prospective purchasers who would in time have a claim to be local residents.
Elfyn Llwyd for Plaid Cymru, said the rules which protected the Welsh language had been accepted by the Wales Office and the National Assembly.
If anyone was accusing the council of maladministration they should refer the matter the ombudsman, he said.
Mr Grieve said: "It's completely outrageous, no local people are interested in buying the property and the house is now rotting and losing its value.
"Gwynedd council are applying the rules of the housing act capriciously."
Gwynedd council say the house was on sale under section 157 of the 1985 Housing Act.
"Authorities in national parks can restrict the resale of a council house to a person who has been living or working in the area for the past three years," said a spokeswoman.
Welsh language pressure-group Cymuned, has attacked the MP for his comments.
"What can he know about the housing crisis in rural Gwynedd, where local people are priced out of the housing market and kicked out of their own communities?," said spokesman Simon Brooks.